The first reading of an ordinance implementing a one-percent occupational tax in Murray narrowly passed the city council on Thursday night.

The council also passed the first reading of an ordinance repealing city stickers and a resolution to lower property, vehicle and insurance taxes. Mayor Jack Rose cast the tie-breaking vote for all three agenda items.

The measures need to pass second readings before going into effect. These readings will likely occur in two weeks on August 24.

On all items:

Yes: Billington, Bohannon, Bolin, Miller, Pittman, Shoemaker

No: Bell, Cherry, Hudspeth, Roberts, Scott, Young

The occupational tax narrowly passed following discussion that echoed some aspects of the debate from the previous meeting. An amendment was added to the payroll tax ordinance that the council not raise the one-percent amount for at least three years (see details below).

Council member Danny Hudspeth urges council consider exemption for low-wage workers.

Credit Matt Markgraf, WKMS

Council member Danny Hudspeth, who voted against the tax, said he felt the numbers in the committee report are “overstated.” Acknowledging that the votes have been evenly split on the matter, with the Mayor breaking the tie, Hudspeth said “you guys have won.” He said how much the city will get in revenue is unknown with everyone “doing their own math.”

Hudspeth said the elderly, who may stand to gain from not paying an occupational tax and seeing a future break on other taxes, already get a break through the homestead exemption. He said he’s concerned about people “on the bottom end of the spectrum who aren’t getting a break.” He urged the council to consider reducing the overall payroll tax amount to half a percent and further reduce the amount low-income workers will owe (He said, for example, if someone made $20,000 to exempt the first $10,000. The tax would then be $50, which is equivalent to the current city sticker). He said the city should budget like a business. And considered that a future city council may change the rates.

In a moment of tension, Council Member Johnny Bohannon, who voted in favor of the tax, said he resented that Hudspeth said inferred that those in favor of the tax "had won” and insisted that the City of Murray “is going to win.” Hudspeth said he was sorry if it offended him, but 'six for' and 'six against' “is what it is.”

Council Member John Mark Roberts said he is concerned that the process has not been open and transparent and that people living ‘paycheck to paycheck’ can’t afford the tax. In repealing the city sticker, Roberts said the vote is “getting the cart in front of the horse” as it is proceeding on the assumption that the payroll tax will pass.

Council member Wes Bolin suggested using any additional revenue gleaned from the payroll tax to offset amount owed by low-wage workers.

Credit Matt Markgraf, WKMS

In the resolution to lower property, vehicle and insurance tax, Council member Wes Bolin stated a position that should the city garner additional revenue beyond the committee report’s recommended needs (around $4 million), he wanted to see it set aside to be used as an exemption for lower-wage earners, in agreement with some of Hudspeth’s statements. Council member Dan Miller (who chaired the mayor’s committee) said this was considered, but legal barriers preclude a city from treating classes of people differently and noted potential issues related to fluctuations in the workforce. He said, however, that it could be worth further exploration.

Following up, Bolin said he didn't suggest his position as an amendment because with the needs recognized by the committee and with proposed reductions in property and insurance tax - and city sticker repeal - he wasn't sure how to make the numbers work, but hopes long-term a solution can be found.

Amendment to the ‘Payroll Tax’

Council member Jason Pittman proposed an amendment to the payroll tax ordinance to include language that it not be ‘upwardly adjusted’ for at least three years beginning January 1, 2018, the date in which the ordinance would go into effect.

Pittman said he has heard discussion that the payroll tax should wait until the state government is through implementing tax reform. He said, however, “I don’t believe we can rely upon a plan that’s not yet been created to fix past and overdue problems for our community that need addressing now.” He said the three-year time frame shows people in the community that the rate won’t be “raised over night” and gives the state an “ample amount of time to overhaul the tax code if that’s possible, if that’s going to even happen, possibly.” He said at that time, if there is a better opportunity for the city to consider, then the city may then take that option and abolish the payroll tax all together.

Vote on the amendment was split. Mayor Rose cast the tie-breaker.

Murray Mayor Jack Rose cast tie-breakers on all votes

Credit Matt Markgraf, WKMS

After the meeting, Mayor Rose said, “I think tonight you saw a lot of action where I would not have broken the tie in favor if I didn’t think it was in the best interest in Murray and the future in terms looking at what are the possible revenue sources and how those are going to grow with the city.” He wouldn’t speculate on the overall outcome and said, “well see two weeks from now, I guess.”

The Murray City Council approved Thursday night to draft an ordinance for a one-percent payroll tax, an ordinance to eliminate city stickers and a resolution to lower various taxes (property, vehicle and insurance as recommended by the committee). These ordinances would need to pass twice before they are enacted.